The Hunters Point Shipyard project breaks ground last year. The homes are ready for residents.

The Hunters Point Shipyard project breaks ground last year. The homes are ready for residents.

Photo: Michael Short / Special To The Chronicle

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Construction worker Ricardo Torres works rebar into footer frames at the site.

Construction worker Ricardo Torres works rebar into footer frames at the site.

Photo: Michael Short, Special To The Chronicle

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Infrastructure including roads and fire hydrants show that a new neighborhood is on its way at the Hunters Point site.

Infrastructure including roads and fire hydrants show that a new neighborhood is on its way at the Hunters Point site.

Photo: Michael Short, Special To The Chronicle

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Manuel Cuevas with Ranger Pipeline shovels dirt while Angelo Gonzales operates a backhoe as construction gets under way at the Shipyards project in Hunter's Point, San Francisco, CA Wednesday September 4, 2013.

Manuel Cuevas with Ranger Pipeline shovels dirt while Angelo Gonzales operates a backhoe as construction gets under way at the Shipyards project in Hunter's Point, San Francisco, CA Wednesday September 4, 2013.

Photo: Michael Short, Special To The Chronicle

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Rebar is ready for use at a new housing development in Bayview-Hunters Point.

Rebar is ready for use at a new housing development in Bayview-Hunters Point.

Photo: Michael Short, Special To The Chronicle

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Neighborhood takes shape in Bayview-Hunters Point

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The handful of condos and town homes now rising at Innes Avenue and Donahue Street on the edge of the former Hunters Point Naval Shipyard doesn't look like much just yet, but even a multi-billion dollar project has to start somewhere.

For builders, San Francisco politicians and generations of Bayview-Hunters Point residents, the dull thud of hammers and deafening roar of construction machinery is the welcome sound of progress in the city's most ambitious development project in a generation.

"We're finally out of the government approval stage and into building, which is why we're in this business," said Kofi Bonner, president of Lennar Urban, which is lead developer of the project.

There's plenty of building ahead. While the work going on now is part of an initial 88-home development that is expected to open next year, the entire project - which will be built over the next 20 years - will include about 12,000 new homes and apartments, shopping areas, office and manufacturing buildings and more than 300 acres of open space on a site of about 770 acres that stretches from near India Basin south to Candlestick Point.

"There's nothing legal hanging over the project and it's fully entitled, so now it's full steam ahead," said Wells Lawson, the city's project manager for the site.

Much scheduling still has to be worked out. While the Navy transferred the first 25-acre site, where construction now is under way, to the city in 2004, hazardous waste cleanup continues on the rest of the shipyard project. The Navy is scheduled to turn a number of the parcels over to the city by 2015, with the entire shipyard in city hands and open for development by 2018, Lawson said.

"That all depends on federal funding" for the cleanup, he said. "But so far the Navy is on schedule."

Stadium site beckons

With the construction timeline for the bulk of the former base in the Navy's hands, Lennar and the city are looking south for the opening of the much larger Phase Two development. Once the current football season ends, the 49ers will head to their new stadium in Santa Clara and their longtime home at Candlestick Park will be a target for the wrecking ball.

Despite the disappointment of losing the team - and the cash it generates - to the South Bay, city officials eagerly await the day they no longer have to worry about the Stick.

"After the 49ers leave, there'll be a couple of events to celebrate, maybe an auction, and then it will be up to Lennar to decide what to do with it," Lawson said. "The city doesn't want to keep it on the books."

The developer plans to demolish the stadium sometime after October 2014, clearing the way for a major retail center. The complex could include a 3,000- to 4,000-seat arena, but project details are still to come.

"We had to adjust to the 49ers moving out sooner than expected, but we're already working with a number of retail and entertainment developers" to decide what the project will look like, Bonner said.

The beauty of the Candlestick site, from a developer's point of view, is that much of the infrastructure for handling crowds and construction is already in place, with little or none of the environmental cleanup the shipyard property requires.

"We hope to have a first-rate retail center in place by 2017," Bonner said.

Work on the stadium site will be accompanied by the long-promised reconstruction of the nearby Alice Griffith public housing project. Plans include moving a sewer line and extending streets and utilities to the adjacent site of new units. Site work is expected to begin in mid-2014, with construction starting that fall and units ready for occupancy by 2016.

Both the city and Lennar said that there are no guarantees for any construction schedule and there are plenty of details to work out as the project moves forward. Lennar, for example, had a $1.7 billion construction financing agreement with the Chinese Development Bank that fell apart last April, leaving the developer scrambling for another partner.

But in June, TPG Credit Management purchased what Lennar called "a significant minority stake" in the shipyard project, easing some of the financial concerns.

"We're the management partner and (TPG) is not involved in anything operational," Bonner said. "There are several other intriguing financial possibilities and, in a project this size, you're always looking."

Piece by piece

One possibility involves selling off pieces of the shipyard property to other developers for specific projects, like high-rise development, as part of what Bonner said was an effort to be "flexible and entrepreneurial."

With the country - and the Bay Area - slowly easing out of the economic doldrums, the shipyard project seems to be moving ahead at the right time, with interest growing in the development community.

"Most of the cranes people see around the city are for apartment construction," Bonner said. "We're one of the few that is actually providing homes for sale. It's very exciting."

Despite the developer's bright vision of the future, much of the Hunters Point Shipyard-Candlestick Point project is still little more than legal documents, tentative designs and pretty pictures drawn in architects' offices.

But on the site's eastern edge, the project is growing in wood and concrete.

While only a few homes are under construction, the hillside area off Innes Street is a neighborhood waiting to happen. Brush and weeds still cover much of the site, but paved streets cut through the property. Sidewalks, complete with fire hydrants and curb cuts already covered with bright yellow mats, stand ready for the families that will live in the 1,400 homes scheduled to be built in the next five years.

Retro-looking metal lamp poles line the streets, each hung with a colorful banner publicizing the development as "The Shipyard." A still-vacant hilltop offers a panoramic view of cargo ships anchored in the bay and the Navy's work to prepare its former base for life as the city's newest neighborhood.

"They are going to be selling houses on the hilltop, and this is really a monumental thing," said Lawson. "Now it's not just talk or a development deal. People will actually be living there."